September 22, 2014
Tiger’s Robertson Says Bond Bubble to End in ‘Very Bad Way’
“Bonds derive their value from interest rates, and interest rates are unnaturally low today,” Marks said on the panel.
Stocks derive their value from unnaturally low dividend yields too. So his point was what exactly? Stuff the trillions in cash under a mattress in the long-term hope that it appreciates? That money has to go somewhere.
The unnatural 30-year treasury bond yield was 3.28% when that was said. Since it is now just 2.24%, it can mean only two things.
1. The supernatural vampire is determined to suck the lifeblood out of this economy's short-term savers until it is permanently satisfied. And if there is one thing I know about supernatural vampires, it is the need to feed never truly goes away, lol. Sigh.
2. Stock market investors will continue to laugh at bond market investors no matter how well the bonds do. That's just a given for those who don't understand what the "wimpy" 1% decline in yields over the past few months means over the course of 30 years.
Scratch one more bond bubble billionaire from the treasuries should be avoided at all costs camp. In hindsight, the timing of that advice was legendarily awful. Perhaps he should have factored in what the price of oil was doing, read up on Japan's economy after their real estate bubble popped in the early 1990s, glanced at a 35 year chart of treasury yields to setup a baseline for what natural means in a long-term declining interest rate environment, looked into the deposit glut of US banks, and/or studied the bond yields in the aftermath of the Great Depression. Just a hunch.
This is mot investment advice. It's actually pure unadulterated heckling of a billionaire though, and there's no telling what that's worth. I can say this. I alone got at least 99 cents of enjoyment out of teasing a financial superior and supposed market expert. Your actual return on reading investment may vary. Past giggling is not necessarily indicative of future laughter outbursts. ;)
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